This paper evaluates the UK’s “Flood Re” program, including the roles of the public and private sectors, risk modeling and risk communication, technical underwriting, distributional aspects, and behavioral implications of the program.
Flood Re is widely hailed as an innovative approach to disaster risk insurance. This paper offers a mixed-methods evaluation of the new pool, asking whether it is “fit for purpose” and “fit for the future.” The investigation considers the roles of the public and private sectors, risk modelling and risk communication, technical underwriting, distributional aspects and the behavioural implications of Flood Re, particularly with regards to risk reduction and prevention. The paper concludes that the new pool is a transitional reinsurance arrangement that supports the private insurance market and secures affordability of flood insurance in the UK through premium subsidies. However, this approach is likely to come under pressure in the face of rising flood risk as it fails to incentivize flood risk management and risk reduction efforts.